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International Game Technology PLC Reports Second Quarter 2017 Results
- Net loss of $290 million includes $220 million of net foreign exchange loss; adjusted Net income of $31 million
- Adjusted EBITDA of $424 million reflects strong lottery results and global gaming machine sales
- Net debt of $6,999 million, down from $7,569 million at 2016 year end
- Cash dividend declared of $0.20 per ordinary share

LONDON, Aug. 1, 2017 /PRNewswire/ -- International Game Technology PLC ("IGT") (NYSE:IGT) today reported financial results for the second quarter and six months ended June 30, 2017. Today, at 8:00 a.m. EDT / 1:00 p.m. BST / 2:00 p.m. CEST, management will host a conference call and webcast to present the second quarter results; access details are provided below.

IGT is the global leader in gaming. We enable players to experience their favorite games across all channels and regulated segments, from Gaming Machines and Lotteries to Interactive and Social Gaming. Leveraging a wealth of premium content, substantial investment in innovation, in-depth customer intelligence, operational expertise and leading-edge technology, our gaming solutions anticipate the demands of consumers wherever they decide to play. We have a well-established local presence and relationships...

"Our second quarter results reflect strong key performance indicators for both our global Lottery and Gaming businesses," said Marco Sala, CEO of IGT. "Lottery growth is benefiting from innovation and effective sales and product marketing initiatives. In Gaming, the global installed base was up and unit sales of gaming machines were higher, as were average selling prices, all supported by strong demand for new cabinets. Overall, we are pleased with the results of the first half, and we expect a more robust product offer to support stronger sales and profit levels in the second half of the year."

"We've made a lot of good progress on many levels so far this year," said Alberto Fornaro, CFO of IGT. "We are lowering our debt and we are enhancing cash generation through disciplined asset and financial management. We are maintaining our outlook for adjusted EBITDA and net debt for the year, and have modestly reduced capital expenditures to account for certain timing shifts."

Summary of Consolidated Second Quarter 2017 Financial Results

 

Quarter Ended June 30,

Change

Constant
Currency
Change 

 

2017

2016

(%)

(%)

(In $ millions, unless otherwise noted)

       

Revenue

1,220

1,285

-5%

-5%

Operating Income

192

171

12%

12%

Net (loss) income per diluted share

(1.43)

0.36

NA

 NA 

Net debt

6,999

7,830

-11%

 NA 

Adjusted EBITDA

424

443

-4%

-4%

Adjusted Operating Income

264

290

-9%

-9%

Adjusted net income per diluted share

0.15

0.43

-65%

 NA 

 

Note: Adjusted EBITDA, adjusted operating income, and adjusted net income per diluted share are non-GAAP financial measures.  Reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are provided at the end of this news release. 

Comparability of Results

All figures presented in this news release are prepared under U.S. GAAP, unless noted otherwise. Adjusted figures exclude the impact of items such as purchase accounting, impairment charges, restructuring expense, foreign exchange, and certain one-time, primarily transaction-related items.  Reconciliations to the most directly comparable U.S. GAAP measures are included in the tables in this news release. Constant currency changes for 2017 are calculated using the same foreign exchange rates as the corresponding 2016 period. Management uses non-GAAP financial measures to understand and compare operating results across accounting periods, for internal budgeting and forecasting purposes, and to evaluate the Company's financial performance. Management believes these non-GAAP financial measures reflect the Company's ongoing business in a manner that allows for meaningful period-to-period comparisons and analysis of business trends. These constant currency changes and non-GAAP financial measures should however be viewed in addition to, and not as an alternative for, the Company's reported results prepared in accordance with U.S. GAAP.

Overview of Consolidated Second Quarter Results

Consolidated revenue was $1,220 million compared to $1,285 million in the second quarter of 2016. The constant currency decline of 5% is mostly attributable to the new Lotto concession dynamics and the sale of Double Down Interactive LLC ("DoubleDown"), which closed on June 1, 2017.

Global lottery same-store revenue, excluding Italy, grew 2.6% in the second quarter, on top of strong North America jackpot activity in the prior year period. Excluding multi-state jackpot games, global lottery same-store revenue grew 4.9%. In Italy, late numbers activity was lower than the elevated levels in the second quarter of 2016. Excluding late numbers, Italy Lotto wagers increased 1%.

Gaming service revenue was primarily impacted by the sale of DoubleDown. The global installed base continues to grow, rising 2,701 units from the prior-year period. Global gaming product revenue increased 5% over the second quarter of 2016 driven by 25% growth in terminal sales that was partially offset by lower systems sales. The Company shipped 8,884 gaming machines worldwide during the second quarter, led by strong replacement unit demand.

Operating income was $192 million, compared to $171 million in the second quarter of 2016, and Adjusted operating income was $264 million compared to $290 million in the prior-year period. Adjusted EBITDA was $424 million compared to $443 million in the second quarter of 2016, reflecting the DoubleDown sale and the new Italy Lotto concession terms that were partially offset by disciplined operating expense management.

Interest expense was $116 million compared to $118 million in the prior-year period.

Net loss attributable to IGT was $290 million in the second quarter of 2017 inclusive of $220 million of net foreign exchange loss. On an adjusted basis, net income attributable to IGT was to $31 million. The Company reported a net loss per diluted share of $(1.43) and earned $0.15 per diluted share on an adjusted basis.

Cash from operations was $543 million in the first half of the year and capital expenditures were $371 million. The Company made the final $185 million upfront installment payment for the new Lotto concession in Italy during the second quarter.

Cash and cash equivalents were $495 million as of June 30, 2017, compared to $294 million as of December 31, 2016. Net debt was $6,999 million as of June 30, 2017.

Operating Segment Review

North America Gaming & Interactive
Revenue for North America Gaming & Interactive was $310 million compared to $350 million in the second quarter of 2016. Comparability is affected by the sale of DoubleDown. 

Service revenue was $208 million compared to $246 million in the prior-year period, reflecting the DoubleDown sale and a year-over-year decrease in the installed base. Product sales were $102 million compared to $104 million in the second quarter of 2016, which benefitted from a large system sale. Terminal sales improved 16%, driven by higher average selling prices and increased new and expansion unit shipments. The segment shipped 5,293 gaming machine units in the quarter compared to 5,163 units in the prior-year period.

Operating income for North America Gaming & Interactive was $76 million compared to $88 million in the second quarter of 2016. The decline is primarily due to lower revenues, largely from the sale of DoubleDown, and partially offset by a decrease in operating expenses.

North America Lottery
North America Lottery revenue was $293 million in the second quarter of 2017, compared to $286 million reported in the second quarter of 2016. The growth reflects solid same-store revenue growth, as well as an incentive contribution from the New Jersey Lottery. Excluding the New Jersey contribution, revenue declined as same-store revenue growth was offset by the exit of certain contracts and lower product sales.

Service revenue was $278 million compared to $267 million in the second quarter of 2016. Same-store revenue growth of 2.2% was supported by 5.6% growth in draw-based games and instant tickets, offset by lower jackpot game activity and the exit of certain low-margin contracts. Product sales were $15 million compared to $19 million in the second quarter of 2016, which included a large sale in California.

Operating income for North America Lottery rose 29% to $79 million reflecting the contribution from the New Jersey incentive and higher same-store revenues, partly offset by lower product sales.  

International
International revenue was $211 million compared to $207 million in the second quarter of 2016. On a constant currency basis, International revenue increased 3%.

Lottery same-store revenue grew 3.6% on broad-based strength in Latin America.

Gaming service revenue was $43 million compared to $46 million in the second quarter of 2016, down 4% at constant currency due to lower interactive revenue. The installed base continued to grow led by Greece and South Africa.

Product sale revenue rose to $79 million from $73 million in the prior-year period, driven by higher gaming terminal sales in Latin America and EMEA, including revenue recognized for gaming machines shipped in the first quarter of 2017. The segment shipped a total of 3,591 gaming machine units during the second quarter of 2017 compared to 2,989 units in the prior-year period, led by strong replacement unit demand.

International operating income, at constant currency, increased 68% on higher gaming product sales and favorable mix; reduced selling, general and administrative expenses; and lower bad debt and impairment expenses.  

Italy
Italy revenue was $404 million compared to $443 million in the second quarter of 2016. At constant currency, revenue declined 8% as a result of the new Lotto concession dynamics and a lower contribution from late numbers.

Total Lotto wagers in the quarter were €1,842 million compared to €2,056 million in the prior-year period, reflecting significantly lower late numbers activity. Excluding late numbers, Lotto wagers increased 1% over the prior year period reflecting continued strength in 10eLotto. Instant-ticket wagers were essentially unchanged at €2,183 million on strong sales of multiplier tickets despite fewer new ticket launches in 2017.  

Machine gaming service revenue was in-line with the prior year period, as increased vertical integration was offset by higher gaming machine taxes. Sports betting revenue increased in the second quarter of 2017 on higher wagers and improved payout.

Italy operating income was $114 million compared to $161 million in the second quarter of 2016. The decrease was mainly attributable to the new Lotto dynamics and lower late number wagers.

Other Developments

The Company's board of directors declared a quarterly cash dividend of $0.20 per ordinary share. The dividend is payable on August 24, 2017 to holders of record as of the close of business on August 11, 2017.

On July 26, 2017, the Company issued a news release announcing a new term loan facility and amendment to the revolving credit facilities. As communicated in that release, those transactions, along with certain additional actions, are expected to deliver approximately $60 million in annualized interest cost savings.

Outlook

The Company is maintaining its outlook for adjusted EBITDA of $1,600-$1,680 million, and the expectation for net debt remains $6,950-$7,150 million for the full year 2017 period. The outlook for maintenance and growth capital expenditures has been reduced by $50 million to $575-$625 million.

Conference Call and Webcast

Today, at 8:00 a.m. EDT / 1:00 p.m. BST / 2:00 p.m. CEST, management will host a conference call to present the second quarter 2017 results. Listeners may access a live webcast of the conference call along with accompanying slides under "News, Events & Presentations" on IGT's Investor Relations website at www.IGT.com. A replay of the webcast will be available on the website following the live event. To listen by telephone, the dial in number is +44 (0) 20 3427 1915 for participants in the United Kingdom and +1 877 280 1254 for listeners outside the United Kingdom. The conference ID/confirmation code is 3185617. A telephone replay of the call will be available for one week at +44 (0) 20 3427 0598 or +1 347 366 9565 using the conference ID/confirmation code 3185617.

About IGT
IGT (NYSE:IGT) is the global leader in gaming. We enable players to experience their favorite games across all channels and regulated segments, from Gaming Machines and Lotteries to Interactive and Social Gaming. Leveraging a wealth of premium content, substantial investment in innovation, in-depth customer intelligence, operational expertise and leading-edge technology, our gaming solutions anticipate the demands of consumers wherever they decide to play. We have a well-established local presence and relationships with governments and regulators in more than 100 countries around the world, and create value by adhering to the highest standards of service, integrity, and responsibility. IGT has over 12,000 employees. For more information, please visit www.IGT.com.

Cautionary Statement Regarding Forward-Looking Statements
This news release may contain forward-looking statements (including within the meaning of the Private Securities Litigation Reform Act of 1995) concerning International Game Technology PLC and its consolidated subsidiaries (the "Company") and other matters. These statements may discuss goals, intentions, and expectations as to future plans, trends, events, dividends, results of operations, or financial condition, or otherwise, based on current beliefs of the management of the Company as well as assumptions made by, and information currently available to, such management. Forward-looking statements may be accompanied by words such as "aim," "anticipate," "believe," "plan," "could," "would," "should," "shall", "continue," "estimate," "expect," "forecast," "future," "guidance," "intend," "may," "will," "possible," "potential," "predict," "project" or the negative or other variations of them. These forward-looking statements speak only as of the date on which such statements are made and are subject to various risks and uncertainties, many of which are outside the Company's control. Should one or more of these risks or uncertainties materialize, or should any of the underlying assumptions prove incorrect, actual results may differ materially from those predicted in the forward-looking statements and from past results, performance, or achievements. Therefore, you should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include (but are not limited to) the factors and risks described in the Company's annual report on Form 20-F for the financial year ended December 31, 2016 and other documents filed from time to time with the SEC, which are available on the SEC's website at www.sec.gov and on the investor relations section of the Company's website at www.IGT.com. Except as required under applicable law, the Company does not assume any obligation to update these forward-looking statements. You should carefully consider these factors and other risks and uncertainties that affect the Company's business. All forward-looking statements contained in this news release are qualified in their entirety by this cautionary statement. All subsequent written or oral forward-looking statements attributable to International Game Technology PLC, or persons acting on its behalf, are expressly qualified in its entirety by this cautionary statement.

Contact:
Robert K. Vincent, Corporate Communications, toll free in U.S./Canada +1 (844) IGT-7452; outside U.S./Canada +1 (401) 392-7452
James Hurley, Investor Relations, +1 (401) 392-7190
Simone Cantagallo, +39 06 51899030; for Italian media inquiries

International Game Technology PLC

Condensed Consolidated Statements of Operations

($ and shares in thousands, except per share data)

Unaudited

       
 

 For the three months ended 

 

 June 30, 

 

2017

 

2016

       

Service revenue

1,023,478

 

1,089,954

Product sales

196,026

 

195,515

Total revenue

1,219,504

 

1,285,469

       

Cost of services

616,740

 

637,832

Cost of product sales

138,362

 

144,640

Selling, general and administrative

210,185

 

239,241

Research and development

80,512

 

84,288

Restructuring expense

11,463

 

6,438

Impairment loss

-

 

2,352

Transaction income, net

(29,630)

 

(43)

Total operating expenses

1,027,632

 

1,114,748

       

Operating income

191,872

 

170,721

       

Interest income

2,460

 

2,754

Other expense, net

(26,112)

 

(575)

Foreign exchange (loss) gain, net

(220,386)

 

88,152

Interest expense

(115,984)

 

(117,715)

Total non-operating expenses

(360,022)

 

(27,384)

       

(Loss) income before provision for income taxes

(168,150)

 

143,337

       

Provision for income taxes

84,086

 

60,439

       

Net (loss) income

(252,236)

 

82,898

       

Less: Net income attributable to non-controlling interests

37,665

 

10,202

       

Net (loss) income attributable to IGT PLC

(289,901)

 

72,696

       
       

Net (loss) income attributable to IGT PLC per common share - basic

(1.43)

 

0.36

Net (loss) income attributable to IGT PLC per common share - diluted

(1.43)

 

0.36

       

Weighted-average shares - basic

202,946

 

201,229

Weighted-average shares - diluted

202,946

 

201,565

 

International Game Technology PLC

Condensed Consolidated Statements of Operations

($ and shares in thousands, except per share data)

Unaudited

       
 

 For the six months ended 

 

 June 30, 

 

2017

 

2016

       

Service revenue

2,050,423

 

2,225,075

Product sales

321,665

 

341,955

Total revenue

2,372,088

 

2,567,030

       

Cost of services

1,241,034

 

1,286,595

Cost of product sales

252,698

 

266,416

Selling, general and administrative

410,709

 

466,767

Research and development

163,133

 

168,995

Restructuring expense

20,730

 

15,856

Impairment loss

-

 

2,352

Transaction (income) expense, net

(27,309)

 

1,431

Total operating expenses

2,060,995

 

2,208,412

       

Operating income

311,093

 

358,618

       

Interest income

5,086

 

7,047

Other expense, net

(23,445)

 

(7,901)

Foreign exchange loss, net

(267,223)

 

(73,404)

Interest expense

(230,783)

 

(236,130)

Total non-operating expenses

(516,365)

 

(310,388)

       

(Loss) income before provision for income taxes

(205,272)

 

48,230

       

Provision for income taxes

73,756

 

51,781

       

Net loss

(279,028)

 

(3,551)

       

Less: Net income attributable to non-controlling interests

65,663

 

16,527

       

Net loss attributable to IGT PLC

(344,691)

 

(20,078)

       
       

Net loss attributable to IGT PLC per common share - basic

(1.70)

 

(0.10)

Net loss attributable to IGT PLC per common share - diluted

(1.70)

 

(0.10)

       

Weighted-average shares - basic

202,714

 

200,840

Weighted-average shares - diluted

202,714

 

200,840

 

International Game Technology PLC

Condensed Consolidated Balance Sheets

($ thousands)

Unaudited

       
 

June 30,

 

 December 31, 

 

2017

 

2016

Assets

     

Current assets:

     

Cash and cash equivalents

494,681

 

294,094

Restricted cash and investments

229,858

 

247,222

Trade and other receivables, net

824,527

 

947,237

Inventories

380,307

 

347,494

Other current assets

381,877

 

424,727

Income taxes receivable

21,474

 

28,792

   Total current assets

2,332,724

 

2,289,566

       

Systems, equipment and other assets related to contracts, net

1,368,878

 

1,199,674

Property, plant and equipment, net

196,529

 

357,841

Goodwill, net

6,391,819

 

6,810,012

Intangible assets, net

2,403,203

 

2,874,031

Other non-current assets

1,507,464

 

1,497,662

Deferred income taxes

32,872

 

31,376

   Total non-current assets

11,900,765

 

12,770,596

       

Total assets

14,233,489

 

15,060,162

       

Liabilities, redeemable non-controlling interests, and shareholders' equity

     

Current liabilities:

     

Accounts payable

1,180,035

 

1,216,079

Other current liabilities

829,681

 

1,097,045

Current portion of long-term debt

567,313

 

77

Income taxes payable

178,945

 

28,590

   Total current liabilities

2,755,974

 

2,341,791

       

Long-term debt, less current portion

6,926,234

 

7,863,085

Deferred income taxes

654,635

 

761,924

Other non-current liabilities

460,664

 

444,556

   Total non-current liabilities

8,041,533

 

9,069,565

       

Total liabilities

10,797,507

 

11,411,356

       

Commitments and contingencies

-

 

-

       

Redeemable non-controlling interests and shareholders' equity

3,435,982

 

3,648,806

       

Total liabilities, redeemable non-controlling interests, and shareholders' equity

14,233,489

 

15,060,162

 

International Game Technology PLC

Condensed Consolidated Statements of Cash Flows

($ thousands)

Unaudited

         
   

 For the six months ended 

   

 June 30,  

   

2017

 

2016

Operating activities

       

Net loss

 

(279,028)

 

(3,551)

Adjustments for:

       

Foreign exchange loss, net

 

267,233

 

73,404

Amortization 

 

218,427

 

253,074

Depreciation 

 

185,906

 

198,881

Amortization of upfront payments to customers

 

101,039

 

55,178

Loss on early extinguishment of 7.500% Senior Secured Notes due 2019

 

25,725

 

-

Debt issuance cost amortization

 

10,042

 

9,086

Stock-based compensation expense

 

3,273

 

17,034

Non-cash gain on sale of Double Down Interactive LLC

 

(51,233)

 

-

Other, net

 

4,040

 

21,598

Cash flows before changes in operating assets and liabilities

 

485,424

 

624,704

Changes in operating assets and liabilities, net of disposition:

       

Trade and other receivables

 

146,763

 

35,133

Inventories

 

1,819

 

(6,271)

Accounts payable

 

(105,477)

 

(68,596)

Other assets and liabilities

 

14,695

 

(61,163)

Net cash flows provided by operating activities

 

543,224

 

523,807

         

Investing activities

       

Proceeds from sale of Double Down Interactive LLC, net of cash divested

 

823,662

 

-

Proceeds from sale of assets

 

162,758

 

49,394

Upfront payments to customers

 

(185,368)

 

(390,390)

Capital expenditures

 

(370,590)

 

(219,632)

Other

 

2,620

 

13,004

Net cash flows provided by (used in) investing activities

 

433,082

 

(547,624)

         

Financing activities

       

Principal payment on 7.500% Senior Secured Notes due 2019

 

(355,697)

 

-

Principal payments on other long-term debt, net

 

(315,918)

 

(236,669)

Dividends paid

 

(81,162)

 

(80,340)

Dividends paid - non-controlling interests

 

(50,464)

 

(27,552)

Payments in connection with the early extinguishment of 7.500% Senior Secured Notes due 2019

 

(38,824)

 

-

Return of capital - non-controlling interests

 

(35,907)

 

(35,407)

Net (payments of) receipts from financial liabilities

 

(28,092)

 

4,510

Capital increase - non-controlling interests

 

127,211

 

151,359

Other

 

(19,352)

 

(2,288)

Net cash flows used in financing activities

 

(798,205)

 

(226,387)

         

Net increase (decrease) in cash and cash equivalents

 

178,101

 

(250,204)

Effect of exchange rate changes on cash

 

22,486

 

12,732

Cash and cash equivalents at the beginning of the period

 

294,094

 

627,484

Cash and cash equivalents at the end of the period

 

494,681

 

390,012

         
         

Supplemental Cash Flow Information:

       

Interest paid

 

(245,753)

 

(256,331)

Income taxes paid

 

(21,492)

 

(38,742)

 

International Game Technology PLC

Net Debt

($ thousands)

       
       
 

June 30,

 

December 31,

 

2017

 

2016

       

6.250% Senior Secured Notes due 2022

1,476,196

 

1,472,150

6.500% Senior Secured Notes due 2025

1,086,213

 

1,085,537

4.750% Senior Secured Notes due 2023

958,878

 

884,917

4.125% Senior Secured Notes due 2020

792,032

 

730,465

5.625% Senior Secured Notes due 2020

594,847

 

593,954

4.750% Senior Secured Notes due 2020

553,922

 

509,050

7.500% Senior Secured Notes due 2019

149,420

 

521,894

5.500% Senior Secured Notes due 2020

126,001

 

126,294

5.350% Senior Secured Notes due 2023

61,135

 

61,187

6.625% Senior Secured Notes due 2018

-

 

521,556

Senior Secured Notes

5,798,644

 

6,507,004

       

Term Loan Facilities due 2019

909,931

 

839,552

Revolving Credit Facilities due 2021

217,659

 

516,529

Long-term debt, less current portion

6,926,234

 

7,863,085

       

6.625% Senior Secured Notes due 2018

567,313

 

-

Other

-

 

77

Current portion of long-term debt 

567,313

 

77

       

Total debt

7,493,547

 

7,863,162

       

Cash and cash equivalents

494,681

 

294,094

       

Net debt

6,998,866

 

7,569,068

 

 International Game Technology PLC 

 Condensed Consolidated Statement of Operations 

 Reconciliation of Non-GAAP Financial Measures 

 ($ and shares in thousands, except per share data) 

                         
                         
       

Adjustments

   
   

Q2 2017

             

Transaction

 

Q2 2017

   

As

 

Purchase

 

Foreign

 

Restructuring

 

and Refinancing

 

As

   

Reported

 

Accounting

 

Exchange

 

Expense

 

Expense, net

 

Adjusted

                         

 Total revenue 

 

1,219,504

 

(180)

 

-

 

-

 

-

 

1,219,324

                         

 Cost of services 

 

616,740

 

(38,510)

 

-

 

-

 

-

 

578,230

 Cost of product sales 

 

138,362

 

(23,618)

 

-

 

-

 

-

 

114,744

 Selling, general and administrative 

 

210,185

 

(28,169)

 

-

 

-

 

-

 

182,016

 Research and development 

 

80,512

 

(210)

 

-

 

-

 

-

 

80,302

 Restructuring expense 

 

11,463

 

-

 

-

 

(11,463)

 

-

 

-

 Transaction income, net 

 

(29,630)

 

-

 

-

 

-

 

29,630

 

-

 Total operating expenses 

 

1,027,632

 

(90,507)

 

-

 

(11,463)

 

29,630

 

955,292

                         

 Operating income 

 

191,872

 

90,327

 

-

 

11,463

 

(29,630)

 

264,032

                         

 Foreign exchange loss, net 

 

(220,386)

 

-

 

220,386

 

-

 

-

 

-

 Other (expense) income, net 

 

(26,112)

 

1,617

 

-

 

-

 

25,725

 

1,230

 Interest expense, net 

 

(113,524)

 

717

 

-

 

-

 

-

 

(112,807)

 Total non-operating expenses 

 

(360,022)

 

2,334

 

220,386

 

-

 

25,725

 

(111,577)

                         

 (Loss) income before provision for income taxes 

 

(168,150)

 

92,661

 

220,386

 

11,463

 

(3,905)

 

152,455

                         

 Provision for income taxes (a) 

 

84,086

 

32,003

 

50,428

 

2,962

 

(85,782)

 

83,697

                         

 Net (loss) income 

 

(252,236)

 

60,658

 

169,958

 

8,501

 

81,877

 

68,758

                         

 Less: Net income attributable to non-controlling interests 

 

37,665

 

26

 

-

 

-

 

-

 

37,691

                         

 Net (loss) income attributable to IGT PLC 

 

(289,901)

 

60,632

 

169,958

 

8,501

 

81,877

 

31,067

                         

 Net (loss) income per common share - diluted 

 

(1.43)

                 

0.15

 Weighted-average shares - diluted (b)  

 

202,946

                 

203,076

   

(a)

Provision for income taxes was determined based on the statutory tax rate in effect in the respective jurisdiction where the adjustment originated. 

(b)

Weighted-average shares – diluted, as adjusted, include shares that were excluded from the as reported computation, due to the net loss as reported.   

 

 International Game Technology PLC 

 Consolidated Statement of Operations 

 Reconciliation of Non-GAAP Financial Measures 

 ($ and shares in thousands, except share amounts) 

                         
                         
       

Adjustments

   
   

Q2 2016

         

Impairment/

 

Transaction

 

Q2 2016

   

As

 

Purchase

 

Foreign

 

Restructuring

 

(Income)

 

As

   

Reported

 

Accounting

 

Exchange

 

Expense

 

Expense

 

Adjusted

                         

 Total revenue 

 

1,285,469

 

264

 

-

 

-

 

-

 

1,285,733

                         

 Cost of services 

 

637,832

 

(45,340)

 

-

 

-

 

-

 

592,492

 Cost of product sales 

 

144,640

 

(29,687)

 

-

 

-

 

-

 

114,953

 Selling, general and administrative 

 

239,241

 

(34,857)

 

-

 

-

 

-

 

204,384

 Research and development 

 

84,288

 

(496)

 

-

 

-

 

-

 

83,792

 Restructuring expense 

 

6,438

 

-

 

-

 

(6,438)

 

-

 

-

 Impairment loss 

 

2,352

 

-

 

-

 

(2,352)

 

-

 

-

 Transaction income, net 

 

(43)

 

-

 

-

 

-

 

43

 

-

 Total operating expenses 

 

1,114,748

 

(110,380)

 

-

 

(8,790)

 

43

 

995,621

                         

 Operating income 

 

170,721

 

110,644

 

-

 

8,790

 

(43)

 

290,112

                         

 Foreign exchange gain, net 

 

88,152

 

-

 

(88,152)

 

-

 

-

 

-

 Other expense, net 

 

(575)

 

1,260

 

-

 

-

 

-

 

685

 Interest expense, net 

 

(114,961)

 

2,036

 

-

 

-

 

-

 

(112,925)

 Total non-operating expenses 

 

(27,384)

 

3,296

 

(88,152)

 

-

 

-

 

(112,240)

                         

 Income (loss) before provision for income taxes 

 

143,337

 

113,940

 

(88,152)

 

8,790

 

(43)

 

177,872

                         

 Provision for (benefit from) income taxes (a) 

 

60,439

 

41,330

 

(22,703)

 

2,054

 

(32)

 

81,088

                         

 Net income (loss) 

 

82,898

 

72,610

 

(65,449)

 

6,736

 

(11)

 

96,784

                         

 Less: Net income attributable to non-controlling interests 

 

10,202

 

25

 

-

 

-

 

-

 

10,227

                         

 Net income (loss) attributable to IGT PLC 

 

72,696

 

72,585

 

(65,449)

 

6,736

 

(11)

 

86,557

                         

 Net income per common share - diluted 

 

0.36

                 

0.43

 Weighted-average shares - diluted 

 

201,565

                 

201,565

   

(a)

Provision for (benefit from) income taxes was determined based on the statutory tax rate in effect in the respective jurisdiction where the adjustment originated. 

 

 International Game Technology PLC 

 Condensed Consolidated Statement of Operations 

 Reconciliation of Non-GAAP Financial Measures 

 ($ and shares in thousands, except per share data) 

                         
                         
   

 Year to date 

 

Adjustments

 

 Year to date 

   

June 2017

             

Transaction

 

June 2017

   

As

 

Purchase

 

Foreign

 

Restructuring

 

and Refinancing

 

As

   

Reported

 

Accounting

 

Exchange

 

Expense

 

Expense, net

 

Adjusted

                         

 Total revenue 

 

2,372,088

 

(358)

 

-

 

-

 

-

 

2,371,730

                         

 Cost of services 

 

1,241,034

 

(80,740)

 

-

 

-

 

-

 

1,160,294

 Cost of product sales 

 

252,698

 

(53,300)

 

-

 

-

 

-

 

199,398

 Selling, general and administrative 

 

410,709

 

(63,097)

 

-

 

-

 

-

 

347,612

 Research and development 

 

163,133

 

(411)

 

-

 

-

 

-

 

162,722

 Restructuring expense 

 

20,730

 

-

 

-

 

(20,730)

 

-

 

-

 Transaction income, net 

 

(27,309)

 

-

 

-

 

-

 

27,309

 

-

 Total operating expenses 

 

2,060,995

 

(197,548)

 

-

 

(20,730)

 

27,309

 

1,870,026

                         

 Operating income 

 

311,093

 

197,190

 

-

 

20,730

 

(27,309)

 

501,704

                         

 Foreign exchange loss, net 

 

(267,223)

 

-

 

267,223

 

-

 

-

 

-

 Other (expense) income, net 

 

(23,445)

 

1,651

 

-

 

-

 

25,725

 

3,931

 Interest expense, net 

 

(225,697)

 

1,805

 

-

 

-

 

-

 

(223,892)

 Total non-operating expenses 

 

(516,365)

 

3,456

 

267,223

 

-

 

25,725

 

(219,961)

                         

 (Loss) income before provision for income taxes 

 

(205,272)

 

200,646

 

267,223

 

20,730

 

(1,584)

 

281,743

                         

 Provision for income taxes (a) 

 

73,756

 

70,232

 

61,096

 

6,134

 

(84,929)

 

126,289

                         

 Net (loss) income 

 

(279,028)

 

130,414

 

206,127

 

14,596

 

83,345

 

155,454

                         

 Less: Net income attributable to non-controlling interests 

 

65,663

 

51

 

-

 

-

 

-

 

65,714

                         

 Net (loss) income attributable to IGT PLC 

 

(344,691)

 

130,363

 

206,127

 

14,596

 

83,345

 

89,740

                         

 Net (loss) income per common share - diluted 

 

(1.70)

                 

0.44

 Weighted-average shares - diluted (b) 

 

202,714

                 

203,066

   

(a)

Provision for income taxes was determined based on the statutory tax rate in effect in the respective jurisdiction where the adjustment originated. 

(b)

Weighted-average shares – diluted, as adjusted, include shares that were excluded from the as reported computation, due to the net loss as reported.   

 

 International Game Technology PLC 

 Consolidated Statement of Operations 

 Reconciliation of Non-GAAP Financial Measures 

 ($ and shares in thousands, except share amounts) 

                         
                         
   

 Year to date 

 

Adjustments

 

 Year to date 

   

June 2016

         

Impairment/

     

June 2016

   

As

 

Purchase

 

Foreign

 

Restructuring

 

Transaction

 

As

   

Reported

 

Accounting

 

Exchange

 

Expense

 

Expense

 

Adjusted

                         

 Total revenue 

 

2,567,030

 

956

 

-

 

-

 

-

 

2,567,986

                         

 Cost of services 

 

1,286,595

 

(91,144)

 

-

 

-

 

-

 

1,195,451

 Cost of product sales 

 

266,416

 

(59,351)

 

-

 

-

 

-

 

207,065

 Selling, general and administrative 

 

466,767

 

(69,603)

 

-

 

-

 

-

 

397,164

 Research and development 

 

168,995

 

(994)

 

-

 

-

 

-

 

168,001

 Restructuring expense 

 

15,856

 

-

 

-

 

(15,856)

 

-

 

-

 Impairment loss 

 

2,352

 

-

 

-

 

(2,352)

 

-

 

-

 Transaction expense, net 

 

1,431

 

-

 

-

 

-

 

(1,431)

 

-

 Total operating expenses 

 

2,208,412

 

(221,092)

 

-

 

(18,208)

 

(1,431)

 

1,967,681

                         

 Operating income 

 

358,618

 

222,048

 

-

 

18,208

 

1,431

 

600,305

                         

 Foreign exchange loss, net 

 

(73,404)

 

-

 

73,404

 

-

 

-

 

-

 Other expense, net 

 

(7,901)

 

4,092

 

-

 

-

 

-

 

(3,809)

 Interest expense, net 

 

(229,083)

 

4,074

 

-

 

-

 

-

 

(225,009)

 Total non-operating expenses 

 

(310,388)

 

8,166

 

73,404

 

-

 

-

 

(228,818)

                         

 Income (loss) before provision for income taxes 

 

48,230

 

230,214

 

73,404

 

18,208

 

1,431

 

371,487

                         

 Provision for income taxes (a) 

 

51,781

 

81,901

 

13,574

 

5,180

 

262

 

152,698

                         

 Net (loss) income 

 

(3,551)

 

148,313

 

59,830

 

13,028

 

1,169

 

218,789

                         

 Less: Net income attributable to non-controlling interests 

 

16,527

 

50

 

-

 

-

 

-

 

16,577

                         

 Net (loss) income attributable to IGT PLC 

 

(20,078)

 

148,263

 

59,830

 

13,028

 

1,169

 

202,212

                         

 Net (loss) income per common share - diluted 

 

(0.10)

                 

1.00

 Weighted-average shares - diluted (b) 

 

200,840

                 

201,547

   

(a)

Provision for (benefit from) income taxes was determined based on the statutory tax rate in effect in the respective jurisdiction where the adjustment originated. 

(b)

Weighted-average shares – diluted, as adjusted, include shares that were excluded from the as reported computation, due to the net loss as reported.   

 

International Game Technology PLC

Adjusted EBITDA and Free Cash Flow

Reconciliations of Non-GAAP Financial Measures

($ thousands)

         
         
   

For the three months ended

   

June 30,

   

2017

 

2016

         

Net (loss) income

 

(252,236)

 

82,898

Provision for income taxes

 

84,086

 

60,439

Non-operating expenses

 

360,022

 

27,384

Amortization

 

102,186

 

127,578

Depreciation 

 

93,985

 

100,364

Amortization of upfront payments to customers

 

51,640

 

27,769

Restructuring expense

 

11,463

 

6,438

Stock-based compensation expense

 

2,424

 

7,732

Bad debt expense

 

11

 

-

Impairment loss

 

-

 

2,352

Non-cash purchase accounting (excluding D&A)

 

(204)

 

224

Transaction income, net

 

(29,630)

 

(43)

Adjusted EBITDA

 

423,747

 

443,135

         
         
         

Cash flows from operating activities

 

259,556

 

318,202

Capital expenditures

 

(198,538)

 

(121,961)

Upfront payments to customers

 

(185,368)

 

(390,390)

Free Cash Flow

 

(124,350)

 

(194,149)

 

International Game Technology PLC Segment Performance

Revenue Detail 

($ millions)

                 
                 
       

INTERNATIONAL GAME TECHNOLOGY PLC

 

Quarter Change

       

2016

2017

 

Percentage

Constant FX

       

Q2 

Q2 

 

Q2

Q2

Gaming

 

Total Revenue

663

630

 

-4.9%

-4.5%

               
 

Gaming Services

495

454

 

-8.3%

-7.8%

   

Terminal 

320

311

 

-2.7%

-2.4%

   

Social (DDI)

72

43

 

-40.1%

-39.9%

   

Other

103

99

 

-3.5%

-2.0%

               
 

Product Sales

168

177

 

5.1%

5.0%

   

Terminal 

106

132

 

25.3%

25.0%

   

Other

63

44

 

-28.8%

-28.8%

                 

Lottery

 

Total Revenue

546

502

 

-8.1%

-7.6%

               
 

Lottery Services

519

485

 

-6.6%

-6.2%

   

FM/Concessions

458

426

 

-7.0%

-6.6%

   

LMA

39

55

 

42.1%

42.1%

   

Other Services

22

4

 

-82.8%

-79.9%

               
 

Product Sales

27

18

 

-35.5%

-35.3%

   

Terminal 

8

1

 

-85.8%

-85.8%

   

Systems/Other

19

16

 

-13.1%

-12.9%

                 

Other

 

Total Revenue

76

87

 

13.9%

14.5%

               
 

Service Revenue

76

85

 

12.0%

12.4%

 

Product Sales

0

2

 

586.2%

636.8%

                 

Consolidated

 

Revenue

1,285

1,220

 

-5.1%

-4.7%

               
               
 

Operating Income:

         
   

Segment Total

338

315

 

-6.9%

-6.8%

   

Purchase Accounting

(111)

(90)

 

-18.4%

-18.3%

   

Corporate Support

(57)

(33)

 

-42.7%

-41.1%

   

Total

171

192

 

12.4%

12.1%

                 
                 
       

NORTH AMERICA GAMING & INTERACTIVE

 

Quarter Change

       

2016

2017

 

Percentage

Constant FX

       

Q2 

Q2 

 

Q2

Q2

Gaming

 

Total Revenue

350

310

 

-11.3%

-11.1%

               
 

Gaming Services

246

208

 

-15.4%

-15.3%

   

Terminal 

132

122

 

-7.5%

-7.4%

   

Social (DDI)

72

43

 

-40.1%

-39.9%

   

Other

42

43

 

2.3%

2.4%

               
 

Product Sales

104

102

 

-1.6%

-1.3%

   

Terminal 

64

74

 

16.3%

16.8%

   

Other

40

28

 

-30.3%

-30.0%

                 

Total

 

Revenue

350

310

 

-11.3%

-11.1%

               
 

Operating Income

88

76

 

-13.5%

-14.5%

                 
                 
       

NORTH AMERICA LOTTERY

 

Quarter Change

       

2016

2017

 

Percentage

Constant FX

       

Q2 

Q2 

 

Q2

Q2

Gaming

 

Total Revenue

37

37

 

-1.6%

-1.1%

               
 

Gaming Services

37

37

 

-1.5%

-1.1%

   

Terminal 

26

25

 

-1.1%

-1.1%

   

Social (DDI)

0

0

 

0.0%

0.0%

   

Other

12

11

 

-2.4%

-1.0%

               
 

Product Sales

0

0

 

-34.3%

-34.3%

   

Terminal 

0

0

 

-100.0%

-100.0%

   

Other

0

0

 

-28.7%

-28.7%

                 

Lottery

 

Total Revenue

249

256

 

2.9%

2.9%

               
 

Lottery Services

230

242

 

5.1%

5.1%

   

FM/Concessions

163

158

 

-3.0%

-3.0%

   

LMA

39

55

 

42.1%

42.1%

   

Other Services

28

28

 

0.5%

0.5%

               
 

Product Sales

19

15

 

-22.9%

-22.8%

   

Terminal 

8

1

 

-85.7%

-85.7%

   

Systems/Other

11

14

 

20.2%

20.3%

                 

Total

 

Revenue

286

293

 

2.3%

2.4%

               
 

Operating Income

61

79

 

29.2%

28.9%

                 
                 
       

INTERNATIONAL

 

Quarter Change

       

2016

2017

 

Percentage

Constant FX

       

Q2 

Q2 

 

Q2

Q2

Gaming

 

Total Revenue

110

117

 

6.0%

6.7%

               
 

Gaming Services

46

43

 

-7.0%

-4.2%

   

Terminal 

13

13

 

0.7%

1.3%

   

Social (DDI)

0

0

 

0.0%

0.0%

   

Other

34

30

 

-10.0%

-6.2%

               
 

Product Sales

64

74

 

15.4%

14.5%

   

Terminal 

42

58

 

38.5%

37.3%

   

Other

22

16

 

-27.6%

-27.9%

                 

Lottery

 

Total Revenue

79

75

 

-5.1%

-2.6%

               
 

Lottery Services

70

72

 

1.8%

4.6%

   

FM/Concessions

53

49

 

-7.7%

-5.5%

   

LMA

0

0

 

0.0%

0.0%

   

Other Services

18

23

 

30.5%

35.0%

               
 

Product Sales

8

3

 

-65.0%

-64.6%

   

Terminal 

1

0

 

-87.0%

-87.0%

   

Systems/Other

8

3

 

-63.2%

-62.7%

                 

Other

 

Total Revenue

18

20

 

7.7%

7.6%

               
 

Service Revenue

18

18

 

-0.7%

-1.6%

 

Product Sales

0

2

 

586.2%

636.8%

                 

Total

 

Revenue

207

211

 

2.0%

3.3%

               
 

Operating Income

28

45

 

63.3%

68.4%

 
 
       

ITALY

 

Quarter Change

       

2016

2017

 

Percentage

Constant FX

       

Q2 

Q2 

 

Q2

Q2

Gaming

 

Total Revenue

166

165

 

-0.4%

0.1%

               
 

Gaming Services

166

165

 

-0.5%

-0.1%

   

Terminal 

150

150

 

0.2%

0.7%

   

Social (DDI)

0

0

 

0.0%

0.0%

   

Other

16

14

 

-7.8%

-7.2%

               
 

Product Sales

0

1

 

92.3%

96.0%

   

Terminal 

0

0

 

0.0%

0.0%